Selecting a startupsocial entrepreneur

how to do personal assessment of social entrepreneurs in order to fund or support them ?

A good friend, working as social enterprise incubator, asked me how to do personal assessment of a social entrepreneur in order to select who to support ? If the business plan is good, how to assess the social entrepreneur as a person ?

The question is very important to very early stage incubators and angels, this is due the fact that during the early startup stage, business plan is usually subjected to radical changes even when thoroughly developed, it is also usually the situation where past performance information is not quite there.

Thus, making social investment decision for seed stage social enterprise base primarily on well developed business plan is a beautiful delusion. Business plan is very important but no where near the ability to assess the only real thing in those social enterprises at this stage, the social entrepreneurs themselves. Almost everything else are wishful thinking.

For me, I believe that social entrepreneur creates an alternative flow of future that bring a better social, environment and economic balance into reality. It’s about channeling a new water flow from a tiny stream into a vibrant river of change. Therefore, I look for some personal characters within the social entrepreneur that will be useful to the creation of that desirable new flow of the future. I found that the follow characters are critical to the success of early stage social entrepreneurs.

• obsessive passion
• a vision for change
• openness and humility
• get things done

(Note: They are not in any order, neither exhaustive nor sufficient as conditions. They also reflect my personal bias.)

Obsessive passion

Almost everyone is capable of becoming passionate with social causes and want to change the world, but very few are obsessive enough on their passion to become social entrepreneurs. Important insight that could possibly lead to innovation in solving specific problems with sustainability and scalability does not come easy, it usually arises from months or years of unyielding drive to understand and become immerse with the problem one is trying to solve. Thousands of repetitive flow of thinking and actings on the same focused topic is required to make any real progress. Obsession implies focus, a truly precious element in startup process.

Passion is a form of energy, obsessive passion is a concentrated flow of energy, which is required to drive new reality into being. The question is then to detect if the entrepreneur is leaking her or his passionate energy, whether there is a serious and personal attempt to understand and solving the targeted issue beyond secondary research or MBA-style market research. How many people were asked in developing the solution ? How much energy was put into trying to gain insight into the problem and practically trying to solve it? How many failed attempts that lead to new insights ? Anything in her history that implies ability to be obsessively focused on one thing over time with sustained intensity.

A vision of change

One can be deeply passionated and yet forever lost in the forest of possibilities, overwhelmed by daily obstacles and operations. A million best intent activities do not necessary lead to success without a vision of where to go.

After awhile, obsessive passion tends to allow the entrepreneur to develop the vision of change, how the world could have been differently with the new system the entrepreneur will create? The clearer the vision , the more clarity it is for the goal and the direction of the entrepreneur’s enterprise. The vision sets goal, objectives and direction of the enterprise, the strategy and operations can be gradually developed.

A vision of change is like the North Star and a compass for an entrepreneur, the team and those people that will share the entrepreneur’s vision in the future, it is impossible to successfully navigate the entrepreneurial journey without such compass.

Therefore, the social entrepreneur needs to be able to tell the vision of change, the content of the vision might be changed eventually but it will show if the entrepreneur has an intuitive capacity to see where to go, a sight on the big picture amidst uncertainty and unclear situations of startup life. It’s more important to understand how the entrepreneur arrived at current vision than the content of the vision itself, this will reveal the thinking process of the entrepreneur.

Openness and humility

The ability to learn and adapt to change is one of the most critical necessary condition for startup entrepreneur. Nothing ever happens as plan, all things change and the entrepreneur needs to be able to deal with this flux. The only way to do this successfully is to be open and humble. As a newborn, the enterprise must learn everything and use everything to its advantage just like in nature. In this sense, humility is not only a moral attribute but a rather strategic necessity to leverage others to improve the newborn’s chance of survival. Humbleness is also required for empathy which is a necessity for an entrepreneur to learn and gain insight from his stakeholders, especially his customers or beneficiaries.

For an incubator, supporter or investor, the entrepreneur’s willingness and ability to take in advices are truly important as the collective experiences / connections always benefit the enterprise far more than the money they put in. Of course, any entrepreneur normally has a bigger ego than average, that is why they are crazy enough to believe in intangible possibilities and do what they do. But such ego must be kept in check or it will simply burst in flame along with the investment.

So it’s crucial to have a deep discussion with entrepreneurs on their plan, see now they response to outside opinions and advices, you can carefully detect if they are open for improvement or senselessly defence their thinking (or just say yes to all suggestions or arguments which either implies that they are not developing their plan very well or they are simply insincere).

Another aspect of openness is the openness to change, not only at the thinking level but also at an emotional level. It is important to sense the entrepreneur’s response to unexpected changes where a certain level of self control is there, a superior entrepreneur tends to be able to leverage many unexpected turn of events to their benefits. I could not emphasise more the importance of emotional and strategic ’openness to change’ of an entrepreneur, this captures their inner resilience and capacity to make the most from the ever moving environments. Half of the time, if not more, the massive scale-up of operations are not planned but a sudden capture of emerging trends and radical turns of events. A look into episodes of the entrepreneur’s personal or working life when they are responding to sudden crisis might be useful, a deliberate attempt to test her or his response to sudden changes in the interview / due diligence process or provoke negative emotions might be necessary.

Get things done

Startup is an art of balancing between exploration and creation. Over exploring will get nothing done, while lack of exploration will limit the innovative potential and scale of the solution. Getting things done after the creative scoping is more defined is critical to early success. Ability to scope the works are vey critical as it needs to balance between potential opportunities and concrete actions. Scoping skill can be deduced from the entrepreneur approach in capturing her market opportunities against her limited resources.

Different people has different style in getting things done. Some come up with detailed plan and work on it very systematically with command and control style, while others might be more intuitive in their planning and let their team or partners figure out the details and collaborate to get things done. There is no right or wrong way to do this as long as the entrepreneur could make some concrete things happen effectively as planned.

A common skill in all these different styles is an ability to break down the works into tasks, assign the team and establishing a communication and follow-up process. Also regardless to style, human skills are crucial, the entrepreneur must be able to engage people, sensitive enough to know their feelings and needs while be resourceful enough to move things towards progress.

Another important trait is the bias towards actions. In order to make things happen amidst perpetual chaos of startup process, successful entrepreneur is normally quite bias towards actions, thinking in term of “what does this discussion or change of plan means for tomorrow or this week’s actions?” If a choice need to be made between equally capable social entrepreneurs with the main difference being their orientation towards thinking versus action, then always try to favour those with bias towards actions, this is because sensible and rapid actions are truly crucial in testing assumptions of the early business and operation model, so the entrepreneur can gather quick feedbacks to adjust her direction towards market demand the soonest.

Detecting the entrepreneur’s skills in scoping, work & team management and bias towards actions are critical to understand whether or not the entrepreneur would be able to get things done.

Conclusion

Perhaps last thing worth mention is that the supporter (incubators, angels, etc.) needs to also be humbled. We do have limited capacity in helping the entrepreneur, and that is why it is crucial that we must accept that our potential to contribute to the success of the entrepreneur is very limited. Thus, we must do our best to choose those with potential already exists within them, especially potential arising from the combination of inner characters discussed above. Our role is to facilitate such hidden potential and brings momentum to the flow of their creative energy.

It’s unlikely to change anyone’s characters or behaviour in our support process, so say no early enough in order not to waste their precious time and yours. If you see a lack of certain characters in the entrepreneur and you still want to support her, make sure that the model would still work even with such gap persists, or there is a way to find other people or partner to close that gap. Over expectation on the entrepreneurs’ capacity to change or improve upon their weakness is a common mistake facing social investors. Thus, don’t be over confidence in your own ability to support the entrepreneur.

To conclude, never rush into making quick investment/support decision base on just a business plan and take your time seeing into the these entrepreneurial characters (obsessive passion, a vision of change, openness and humility as well as an ability to get things done.) These characters might not be sufficient for success, but I believe they would increase the chance substantially. Good luck

Sunit Shrestha
3.8.14